Polluters will shoulder burden of new car tax system

12.00.00am BST (GMT +0100) Thu 7th Sep 2006

Earlier this week, the European Parliament backed a proposed EU law that calls for cars to be taxed according to the amount they pollute rather than by annual registration. The EU Commission's proposal for a Directive is based on removing the registration taxes on passenger cars throughout the EU and introducing taxation of new cars according to their CO2 emissions.

The Parliament wants to reduce CO2 emissions from passenger cars and thereby contribute to the EU's environmental commitments under the Kyoto Protocol. It would also simplify the transfer of a car from one member state to another by cutting the double registration tax which is incurred at the moment.

The proposal would not introduce any new passenger car taxes. It would simplify national car tax systems and eliminating the high differences in taxes for passenger car vehicles across the EU. The vote was the end of the First Reading process - so the law, if finally passed, will not come into effect for several years.

Bill Newton Dunn, Liberal Democrat MEP for the East Midlands, said:

"I back the introduction of green taxes on motorcars which would change our behaviour without raising overall taxation."

"Liberal Democrats in the UK support green taxes and my Westminster colleagues will be providing costed proposals."

"This will facilitate the free movement of vehicles within the internal market and will encourage car manufacturers to build environmentally-friendly cars."